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The 8(a) Advantage

Thinking Bigger Guide 2014-15

Post Categories: Thinking Bigger Guide 2014-15

The U.S. Small Business Administration’s (SBA) 8(a) Business Development Program has helped thousands of small disadvantaged businesses launch successful careers as government contractors.

The nine-year program provides a wide range of services, including marketing help, executive development, mentoring and specialized business training.

For a firm to qualify for the 8(a) program, socially and economically disadvantaged individuals must make up at least 51 percent of the ownership and management.

Defining Socially Disadvantaged

Under federal law, socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identification as members of groups without regard to their individual qualities.

For purposes of the 8(a) Business Development Program, the following individuals are presumed to be socially disadvantaged:

  • Black Americans
  • Hispanic Americans
  • Native Americans (Separate eligibility requirements exist for businesses owned by Alaska Native Corporations, Indian tribes, Native Hawaiian Organizations and Community Development Corporations.)
  • Asian Pacific Americans
  • Subcontinent Asian American

Individuals who are not members of one or more of these groups can be considered for the 8(a) program, but they must provide substantial evidence and documentation that demonstrates that they have been subjected
to bias or discrimination.

Who Is Considered Economically Disadvantaged?

According to the SBA, “economically disadvantaged individuals are socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities.”

The SBA will consider several factors when determining an individual’s economic status, but generally speaking …

  • Participants’ assets cannot exceed $4 million.
  • Net worth must be under $250,000.
  • Personal income, averaged over three years, can’t exceed $250,000.

Be sure to visit the SBA’s website (www.sba.gov/8a) for more information on 8(a) economic guidelines.

Other Requirements

Applicants also must meet each of the following criteria:

  • The business must be a small business by SBA size standards.
  • The business must be controlled, managed and operated full-time by one or more individuals who qualify as disadvantaged.
  • The business must demonstrate potential for success (generally by being in business for at least two years) and have the capacity to perform on government and nongovernment contracts before applying.

Other Benefits of 8(a) Participation

Once businesses are accepted into the 8(a) program, participants can receive sole-source contracts worth up to $4 million for goods and services and $6.5 million for manufacturing.

The 8(a) firms are also able to form joint ventures and teams to bid on contracts. The Mentor-Protégé Program allows 8(a) companies to learn the ropes from other, more experienced businesses.

In addition, 8(a) participants may take advantage of specialized business training, counseling, marketing assistance, and high-level executive development provided by the SBA and its resource partners.

Small businesses interested in the 8(a) program should contact the Kansas City District Office at (816) 426-4900.  To apply, please visit www.sba.gov/8abd.